For Spotify 2016 Is All About Programmatic

“2015 was the year we started opening up, which was huge for us, and 2016 is the year we’re going to be fully open,” said Spotify CRO Jeff Levick. “We’re going to keep expanding and investing heavily in the programmatic channel.”

In November, the music streaming platform rolled out its programmatic ad offering, a private marketplace that allows advertisers to tap into Spotify’s first-party data to target by genre (i.e., rock, Latin, blues, folk, etc.); by playlist (i.e., “100 Most Uplifting Songs Ever,” “Life Sucks,” “The PMS Playlist” and the like); and by subscriber data, including age and gender.

For the moment, Spotify’s programmatic solution is centered around display and video, but audio ads are imminent. The public comment period on the Interactive Advertising Bureau’s OpenRTB 2.4 protocol – which includes support for digital audio ad units – closes on Feb. 19.

“For the first time ever there is going to be an audio standard for programmatic,” said

Jana Jakovljevic, a Rubicon vet and head of programmatic solutions at Spotify. “It’s completely nascent right now, but once the standard is agreed upon, it won’t take long for tech vendors, SSPs and DSPs to adopt the standard and start running audio alongside their other formats.”

According to internal data, the average cross-platform Spotify user – someone who accesses the platform through mobile and desktop – listens to around 148 minutes of music on Spotify a day.

As of June, Spotify had 75 million monthly active users, 20 million of whom are paid subscribers. By the end of 2015, the total number of MAUs reportedly hit 100 million. More than 80% of Spotify’s users tune in on a mobile device.

AdExchanger caught up with Levick and Jakovljevic to talk video, mobile and programmatic plans for 2016.

AdExchanger: How far are you down the programmatic path?

JANA JAKOVLJEVIC: We’ve made huge strides since last year, including starting to test programmatic audio.

Our plan is to continue rolling out data segments. We’ve just scratched the surface with our data offering. We can generate all sorts of insights into our users because they’re all logged in. We know what time of day they’re listening, what they’re listening to, what device they’re listening on and where they’re listening from.

Audio combined with mobile becomes particularly powerful in programmatic. Buyers can target someone based on the time of day, their location and based on Spotify’s own data. Is someone working out right now? Are they at a party? Are they commuting? What is the person interested in and what are they feeling? Are they listening to a happy playlist or a sad one? We can make all of those insights available to buyers.

What is mobile use like on Spotify?

JEFF LEVICK: The majority of our users are on mobile and it’s growing fast, but that doesn’t make us mobile only. We haven’t seen a decline in our desktop business. Desktop isn’t growing at the pace of mobile, but we do continue to see growth in that area.

Why is that?

JF: Being able to have music in your pocket while you’re on the go is a great case for mobile, but if you’re commuting or doing background listening at work or if you’re at home, desktop is actually a huge business for us.

From our data we can see the switchover points when people transfer between different platforms. Before 9 a.m. it’s mobile during the commute. After 9 a.m. desktop lights up when people get to work and then it’s back to mobile for the commute home. In the evenings there’s a spike against desktop.

JL: We’re testing something in the political space that we’re planning on rolling out more broadly soon, within the next couple of weeks.

One of the reasons why candidates are interested in us when it comes to politics is because we have a strong, active youth audience. We have first-party data and we can target beyond demographics, including location.

How much does the competition, Pandora, for example, impact your ad product road map?

JL: We have a very different approach than Pandora. Pandora is a lean-back platform. You set a station and then you go on with what you were doing. It’s a strong case for background listening. We’re about curation, searching and discovering new music. Our listening is lean-forward.

Users are immersed in the platform, and as a result, our strategy is around creating more engaging advertisements like audio and video rather than banner farms.

You finally launched video content at the end of January but, at least for now, there’s not going to be any advertising. What are Spotify’s ambitions around video?

JL: Our platform is a place where brands can tell stories, whether that’s visually or through audio.

But we also have a native video ad product called Sponsored Sessions [launched September 2014] that gives consumers the opportunity to choose to watch a video in return for 30 minutes of ad-free music. It’s one of our most valuable and sought after products because it’s engaging and rewarding.

What other noteworthy ad products does Spotify have up its sleeve?

JL: Last year we formed a partnership with Sony to become the default music player in Playstation, and in Q4 we introduced targeting that’s specific to that platform. Rather than trying to target people who look like they might be gamers, we can target gamers inside the console. We know we’re reaching an audience of gamers because they’re right in the middle of playing a game.